China’s Growth Seen Lagging Neighbors’

China’s Growth Seen Lagging Neighbors’

Economic forecasts cut as COVID-19 response hinders China’s expansion, ADB said.

Reviewed by: Heather Bell
Edited by: Heather Bell

Smaller Asian nations stretching from the Caucasus to the Pacific—from Armenia to Vanuatu—will outpace China’s growth this year as the People’s Republic’s zero-COVID-19 strategy hinders growth, according to the Asian Development Bank. 

Economies of 45 Asian countries, excluding China, are expected to expand 5.3% this year and next, topping China’s expected 3.3% growth this year and 4.5% in 2023, the ADB said this week in a report. In April, the bank had predicted 5% growth for China this year. 

The smaller nations will beat China’s growth for the first time in 30 years, the report said. Russia’s ongoing invasion of Ukraine, monetary tightening by central banks and the continuing COVID lockdown in China are slowing growth, even as the worst effects of the COVID-19 pandemic fade.  

Worsening inflation is also taking a bite, and ADB now expects prices to rise 4.5% this year in the developing Asian countries, more than its previous estimate of 3.7%. Its inflation outlook for next year for the region was lifted to 4% from 3.1%.  

“Global uncertainties are undermining prospects for a return to strong and lasting growth,” the report stated. “Economic prospects have dimmed in particular for the People’s Republic of China.”  

Certain countries in the region are expected to top China through 2023 despite their own downward revisions. Here we consider the largest exchange-traded funds associated with each of those countries. 


India’s economy, the second largest economy in the region, is expected to grow 7.0% this year and 7.2% next.  

The largest fund covering the country is the $4.25 billion iShares MSCI India ETF (INDA). Still, 14 ETFs cover the country’s broad market, various sectors and themes, allowing investors flexibility.  

INDA is down 5.91% and 7.02% for the year to date and 12-month periods ended Sept. 16. Meanwhile, the $7.43 billion iShares MSCI China ETF (MCHI) is down nearly 26% year to date and more than 31% for the 12-month period.  


Indonesia was helped by the commodity price shock caused by Russia’s invasion of Ukraine. The country’s expected gross domestic product growth was adjusted upward to 5.4% from 5.0% for 2022, with 5.0% expected in 2023. The country is the third-fastest-growing economy in the region, after China and India, according to corporate services specialist Acclime.  

The $482.6 million iShares MSCI Indonesia ETF (EIDO) has grown, in contrast with the declines in most markets at the global level. The ETF is up 7.15% so far this year and 15.5% for the 12 months. Investors are apparently taking notice, as the fund has pulled in nearly $86 million so far this year.  

The Philippines 

The Philippines is another country where the GDP expectation for 2022 was upgraded rather than lowered. For 2022, the country’s GDP expectation was raised to 6.5% from 6%, while the expectation for 2023 remained at 6.3%.  

Philippines is among the fastest growing in emerging markets, Acclime notes. That said, it’s represented by a single ETF. The $105.1 million iShares MSCI Philippines ETF (EPHE)  is down nearly 18% year-to-date and 15.18% for the 12-month period. Those losses are better than the declines suffered by MCHI.  


Malaysia is projected to see 6% GDP in 2022 and 4.7% growth in 2023. It’s also one of the top countries in the region for digital entrepreneurship, according to ADB, ranking third after Singapore and Korea.  

Like the Philippines, Malaysia is only represented by one ETF trading on the U.S. market. The $229.6 million iShares MSCI Malaysia ETF (EWM) fell for both the year-to-date and 12-month periods, at -12.06% and -12.36%, respectively. Again, those results are still better than those recorded by MCHI.  


Vietnam’s GDP estimates were unchanged from April to September this year, with 6.5% GDP growth expected for 2022 and 6.7% expected for 2023. The report by ADB notes that the country rebounded more quickly than expected in the first half of 2022. 

However, the $370.7 million VanEck Vietnam ETF (VNM) notched declines for the year-to-date period that were greater than MCHI’s. The fund is down nearly 32% year to date and 26.61% for the 12-month period.  


Contact Heather Bell at [email protected] 

Heather Bell is a former managing editor of She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.